Ethereum leads DeFi in total value locked but faces rising competition

According to DeFi Llama, the Total Value Locked (TVL) across all decentralised finance (DeFi) networks is approaching a record $180 billion, with Ethereum (CRYPTO:ETH) holding a significant portion.

Ethereum currently accounts for $131 billion of this total, solidifying its position as the dominant platform in DeFi.

However, the rise of newer, cost-effective blockchains suggests that users are exploring alternatives to Ethereum.

Decentralised Finance, or DeFi, represents a new financial system that utilises decentralised networks to offer financial products through transparent protocols without intermediaries.

This model allows users to participate as exchanges, liquidity providers, and lenders directly on the blockchain, bypassing traditional financial systems.

The appeal of higher yields compared to traditional finance is driving increased participation in DeFi, as evidenced by the growing DeFi TVL.

While Ethereum has maintained its top position in DeFi, the competitive landscape is evolving.

Since mid-July, the TVL across all DeFi platforms has surged from $103 billion to $180 billion.

Ethereum makes up nearly three-quarters of this total TVL, but other networks like Binance Smart Chain (CRYPTO:BNB), Solana (CRYPTO:SOL), Terra (CRYPTO:LUNA), and Avalanche (CRYPTO:AVAX) are gaining traction.

Binance Smart Chain, the second-largest network, holds $19 billion, or 11% of the total TVL.

Avalanche has seen remarkable growth, with its TVL increasing by nearly 800% in just two and a half weeks, from $258 million to $2.3 billion.

Solana has also made notable gains, with its TVL rising by 170% since mid-August.

In comparison, Ethereum's TVL has grown by only 16% over the same period.

With Cardano (CRYPTO:ADA) planning to launch smart contracts and introduce new DeFi protocols, Ethereum may face increased competition in the coming months.

Although Ethereum benefits from being the first mover in DeFi, newer platforms offering lower transaction costs are gaining ground.

The evolving DeFi landscape could result in a new dominant platform emerging, or Ethereum's established network effects might help it maintain its leadership position.

At the time of writing, the Ethereum (ETH) price was $2,513.72.